If someone sold shares, then he/she is liable to deliver such shares in T+2 time. Suppose a seller is not able to deliver shares, in such a case, it will lead to auction of shares.

The auction market is conducted every day between 2:00 pm and 2:45 pm. Only member brokers of the exchange can participate and sell shares, which are short delivered. Further, to avoid any conflict of interest the exchange does not allow members whose client has defaulted (short delivered) to take part in an auction.

Share auction always leads to a loss in a trader’s account as auction price is always traded with a premium.

To learn more about the share market basics, visit www.marketsmithindia.com.